Karnataka High Court
Kalaburagi Zilla Kabbu Belegarara ... vs The State Of Karntaka on 16 October, 2024
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WP No. 203043 of 2016
C/W WP No. 201155 of 2016
IN THE HIGH COURT OF KARNATAKA,
KALABURAGI BENCH
DATED THIS THE 16TH DAY OF OCTOBER, 2024
BEFORE
THE HON'BLE MR. JUSTICE R.NATARAJ
WRIT PETITION NO. 203043 OF 2016 (GM-RES)
C/W
WRIT PETITION NO. 201155 OF 2016 (GM-RES)
IN WP NO.203043/2016:
BETWEEN:
KALABURAGI ZILLA KABBU BELEGARARA SANGH ®
REPRESENTED BY ITS PRESIDENT,
SRI.JAGNATHRAO PATIL
S/O NAGENDRARRAO PATIL,
AGE: 46 YEARS, OCC: AGRICULTURE,
R/O: RAJAPUR VILLAGE, TQ: CHITTAPUR,
DIST:KALABURAGI.
...PETITIONER
(BY SRI. BASAVARAJ M POLICE PATIL, ADVOCATE)
AND:
Digitally signed
by
MARKONAHALLI 1. THE STATE OF KARNTAKA
RAMU PRIYA REPRESENTED BY
Location: HIGH
COURT OF SECRETARY TO THE GOVERNMENT,
KARNATAKA COMMERCE AND INDUSTRY DEPARTMENT,
VIKAS SOUDHA, BENGALURU-560001.
2. THE COMMISSIONER OF SUGAR CANE DEVELOPMENT
AND DIRECTOR OF SUGARS,
KHB BUILDING, CBAB COMPLEX,
F-BLOCK, 5TH FLOOR,
KAVERI BHAVAN, K.G.ROAD,
BENGALURU-560009.
3. THE SUGAR CONTROL BOARD,
REPRESENTED BY ITS MEMBER SECRETARY, COMMISSIONER
FOR CANE DEVELOPMENT,
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DIRECTOR OF SUGAR IN KARNATAKA,
K.H.B. BUILDING, "F" COMPLEX,
K.G.ROAD, BENGALURU-560009.
4. THE DEPUTY COMMISSIONER
KALBURAGI, MINI VIDHAN SOUDHA,
KALBURAGI-585103.
5. THE DEPUTY COMMISSIONER
YADGIR-585201.
6. THE UNION OF INDIA
REPRESENTED BY THE UNDER SECRETARY TO
THE GOVT. OF INDIA
MINISTRY OF CONSUMER AFFAIRS,
FOOD AND PUBLIC DISTRIBUTION,
DEPARTMENT OF FOOD AND PUBLIC DISTRIBUTION,
NEW DELHI-110001.
7. NSL SUGARS LTD BHUSANOOR
REP: BY ITS MANAGING DIRECTOR,
TQ: ALAND, DIST: KALABURAGI-585302.
8. RENUKA SUGAR LTD.
UNIT NO.5
REP: BY ITS MANAGING DIRECTOR,
TQ: HAVALAGA, DIST: KALABURAGI-585301.
9. M/S SUGARS WORKS LTD. NAGARAHALLI-MALLI
REP: BY ITS MANAGING DIRECTOR,
TQ: JEVARGI, DIST: KALABURAGI-585310.
10. M/S CORE GREEN SUGARS AND FUELS PVT., LTD.,
TUMKUR.
REP. BY ITS MANAGING DIRECTOR,
TQ: SHAHAPUR, DIST: YADGIR-585223.
...RESPONDENTS
(BY SRI. SHIVAKUMAR TENGLI, GOVERNMENT ADVOCATE FOR
RESPONDENT NOS.1 TO 5;
SRI. SUDHIRSINGH R VIJAPUR, ADDITIONAL SOLICITOR GENERAL
OF INDIA FOR RESPONDENT NO.6;
SRI. H.N.SHASHIDHARA, SENIOR ADVOCATE FOR SRI. MAHADEV S.
PATIL, ADVOCATE FOR RESPONDENT NOS.7 AND 9;
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SRI. SUDARSHAN M., ADVOCATE FOR RESPONDENT NO.8;
SRI. RAVI B. PATIL, ADVOCATE FOR RESPONDENT NO.10)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER
DATED 29.08.2015 IN THE FILE NO.DSK/STT/12/2015-16 ISSUED BY
THE RESPONDENT NO.2 HEREIN, THE COPY OF THE SAME IS AT
ANNEXURE-B AND ETC.
IN WP NO.201155/2016:
BETWEEN:
1. SUGAR CANE GROWERS ASSOCIATION, BIJAPUR
NEAR DCC BANK, ALMEL VILLAGE,
DIST: VIJAYAPURA.
REPRESENTED BY ITS PRESIDENT,
SRIMANTH
S/O RAMACHANDRA DUDDAGI.
2. SHIVKUMAR S/O BAPUGOUDA
AGED 32 YEARS,
OCC: AGRICULTURE
R/O KUMASI VILLAGE
TQ: SINDAGI, DIST: VIJAYAPUR
NOW R/O NEAR HANUMAN TEMPLE,
OLD JEWARGI ROAD, KALABURAGI-585102
3. CHANDRAKANTH
S/O NARASINGRAO KULKARNI
AGED 65 YEARS,
OCC: AGRICULTURE AND LEGAL PRACTITIONER
R/O VENKATESH NAGAR,
KALABRUAGI-585102.
...PETITIONERS
(BY SRI. VENKATESH C. MALLABADI, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
REPRESENTED BY PRINCIPAL SECRETARY,
DEPARTMENT OF CANE DEVELOPMENT,
M.S. BUILDING, BANGALORE-1
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2. THE COMMISSIONER OF SUGARCANE DEVELOPMENT
AND DIRECTOR OF SUGARS, KHB BUILDING,
CBAB COMPLEX, F-BLOCK, 5TH FLOOR,
KAVERI BHAVAN, K.G ROAD,
BANGALORE-9
3. THE UNION OF INDIA,
REPRESENTED BY THE UNDER SECRETARY TO THE
GOVERNMENT OF INDIA,
MINISTRY OF CONSUMERS AFFAIRS, FOOD AND
PUBLIC DISTRIBUTION,
DEPARTMENT OF FOOD AND PUBLIC DISTRIBUTION,
KRISHI BHAVAN, NEW DELHI.
4. MAHATAMA GANDHI SHAKARI SUGAR FACTORY LTD.,
BHALKI, DIST: BIDAR,
REPRESENTED BY ITS MANAGING DIRECTOR
5. NARANJA SHAKARI SUGAR FACTORY LTD.,
IMAMPUR, DIST: BIDAR
REPRESENTED BY ITS MANAGING DIRECTOR
6. BIDAR CO-OPERATIVE SHAKARI SUGAR FACTORY LTD.
HALLIKHED, DIST: BIDAR
REPRESENTED BY ITS MANAGING DIRECTOR
7. BHAVANI SUGAR LTD.
BAROOR, DIST: BIDAR
REPRESENTED BY ITS MANAGING DIRECTOR
8. NSL SUGAR LTD. BHUSANOOR
TQ: ALAND, DIST: KALABURAGI
REPRESENTED BY ITS MANAGING DIRECTOR
9. RENUKA SUGAR LTD. UNIT NO.5
TQ: HAVALAGA, DIST: KALABURGI
REPRESENTED BY ITS MANAGING DIRECTOR
10. M/S UGAR SUGAR WORDS LTD.
NAGARAHALLI-MALLI JEWARAGI TQ.
DIST: KALABURAGI
REPRESENTED BY ITS MANAGING DIRECTOR
11. CORE GREEN SUGAR AND FUELS PVT. LTD. TUMKUR
SHAHAPUR TALUKA, DIST: YADGIRI
REPRESENTED BY ITS MANAGING DIRECTOR
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12. M/S KPR SUGAR MILLS PVT. LTD.
ALMEL VILLAGE, TQ: SINDAGI, DIST: VIJAYAPUR
REPRESENTED BY ITS MANAGING DIRECTOR
13. JAMAKHANDI SUGAR LTD.
UNIT NO.2, NAAD K.D.,
TQ: INDI, DIST: VIJAYAPUR
REPRESENTED BY ITS MANAGING DIRECTOR
14. MANALI SUGAR LTD., MALGAN
TQ: SINDAGI, DIST: VIJAYAPUR
REPRESENTED BY ITS MANAGING DIRECTOR
15. INDIAN SUGAR MANUFACTURING COMPANY LTD
HAVINAL
TQ: INDIA, DIST: VIJAYAPUR
REPRESENTED BY ITS MANAGING DIRECTOR
16. DHYANAYOGI SRI SHIVAKUMAR SWAMIJI SUGAR LTD.,
HIREBAVANOOR, TQ: INDIA, DIST: VIJAYAPUR
REPRESENTED BY ITS MANAGING DIRECTOR
...RESPONDENTS
(BY SRI. SHIVAKUMAR TENGLI, GOVERNMENT ADVOCATE FOR
RESPONDENT NOS.1 AND 2;
SRI. SUDHIRSINGH R VIJAPUR, ADDITIONAL SOLICITOR GENEARL
OF INDIA FOR RESPONDENT NO.3;
SRI. H.N.SHASHIDHARA, SENIOR ADVOCATE FOR SRI. MAHADEV S.
PATIL, ADVOCATE RESPONDENT NOS.8, 10, 12, 13, 14 AND 16;
SRI. D.P. AMBEKAR, ADVOCATE FOR RESPONDENT NO.15;
SRI. SUDARSHAN M., ADVOCATE FOR RESPONDENT NO.11;
NOTICE SERVED ON RESPONDENT NOS.7 AND 9)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER
DATED 29.08.2015 IN FILE No. DSK / STT / 12 / 2015-16 ISSUED BY
THE RESPONDENT NO.2 HEREIN, THE COPY OF WHICH IS AT
ANNEXURE-C AND ETC.
THESE PETITIONS HAVING BEEN HEARD AND RESERVED FOR
ORDER ON 25.07.2024 AND COMING ON FOR PRONOUNCEMENT OF
ORDER THROUGH VIDEO CONFERENCE THIS DAY, THE COURT MADE
THE FOLLOWING:
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CORAM: HON'BLE MR. JUSTICE R.NATARAJ
CAV ORDER
(PER: HON'BLE MR. JUSTICE R.NATARAJ)
W.P.No.203043/2016 is filed by an association of
sugarcane growers in Kalaburagi District challenging an order
dated 29.08.2015 passed by the respondent No.2 in File
No.DSK/STT/12/2015-16. The petitioner has also sought for a
direction to the respondent No.1 to take action against the
sugar companies and factories, who have not paid the price of
sugarcane purchased from agriculturists at the rate of
Rs.2,500/- per metric ton.
2. W.P.No.201155/2016 is filed by an association
representing sugarcane growers in Vijayapura and two
sugarcane farmers challenging the order dated 29.08.2015
passed by the respondent No.2 in File No. DSK/STT/12/2015-
16. They have also sought for a direction to the respondent
No.1 to take action against the sugar factories and companies,
who have not paid the price of sugarcane purchased from the
agriculturists at the rate of Rs.2,500/- per metric ton.
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3. (i) The petitioner in W.P.No.203043/2016
contends that the respondent No.2 by a notification dated
23.11.2013 acting under Section 4(f) of the Karnataka
Sugarcane (Regulation of Purchase and Supply) Act, 2013
(henceforth referred to as 'Act, 2013' for short) fixed the price
of sugarcane at Rs.2,500/- per metric ton (ex-field) for the
season 2013-14. It is contended that farmers had supplied
sugarcane to the factories and accordingly, the sugar factories
were required to pay Rs.2,500/- per metric ton to sugarcane
growers, within fourteen days from the date of delivery. It is
contended that many sugar factories had filed Writ Petition
Nos.54865-54867/2013 and connected petitions challenging
the notification dated 23.11.2013 and questioned the authority
of the State Government to fix the price at Rs.2,500/- per
metric ton (ex-field). The said writ petitions were dismissed in
terms of an order dated 06.11.2014. W.A.Nos.37-39/2015 C/w
W.A.Nos.3140-3142/2014 and connected appeals filed there
against were also dismissed by judgment dated 08.10.2015. It
is contended that the sugar factories in Hyderabad - Karnataka
region failed to pay the sugarcane price to the farmers though
there was no order of stay from any Court authorizing them to
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hold up the dues of the farmers. The petitioner therefore,
escalated the complaints of many sugarcane growers before the
State Government.
(ii) It is contended that under Section 4 of the Act,
2013, the Sugarcane Control Board is headed by the ex-officio
Minister in-charge of sugar along with a Co-Chairman and six
members, who are empowered to decide the cane price. By a
notification dated 28.08.2014, the Karnataka Sugarcane
(Regulation of Purchase and Supply) (Amendment) Act, 2014
was published. As per this amendment, the Sugarcane Control
Board was to be constituted with the Minister in-charge of
Sugar and Chairman and eleven members amongst whom the
Commissioner of Cane Development and sugar Director would
be the Secretary of the Board.
(iii) The Commissioner/respondent No.2 passed an
order dated 29.08.2015 reducing the sugarcane price payable
to the farmers in north Karnataka region from Rs.2,500/- per
metric ton (ex-field) to Rs.2,200/- per metric ton (ex-field).
The petitioner is therefore, before this Court challenging the
aforesaid order of the respondent No.2.
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4. (i) The petitioners in W.P.No.201155/2016 have
also contended that the respondent No.2 by a notification dated
23.11.2013 under Section 4(f) of the Act, 2013 fixed the price
of sugarcane at Rs.2,500/- per metric ton (ex-field). They have
also referred to writ petitions filed by the sugar factories
challenging the notification dated 23.11.2013, which were
dismissed in terms of the order dated 06.11.2014. They have
referred to the writ appeals filed there against which too were
dismissed. It is contended that the sugar factories failed to pay
the sugarcane price to the farmers in Hyderabad - Karnataka
region. It is claimed that petitioner No.1 escalated the
complaints and grievance of various farmers before the State
Government. It is claimed that the petitioner No.2 had filed
O.S.Nos.110/2015 and 108/2015 against the sugar factories at
Sindagi Court for recovery of money due to him. It is claimed
that in the said suits, the sugar factory had filed a written
statement contending that the respondent No.2 herein had
passed an order dated 29.08.2015 fixing with retrospective
effect the price of sugarcane purchased in the year 2013-14 at
a sum of Rs.2,200/- per metric ton (ex-field).
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(ii) The plaintiff in the said suit, who was the member
of the petitioner No.1 - association informed the petitioner No.1
about the order dated 29.08.2015. It is contended that the
Act, 2013 was published in the Karnataka Gazette on
21.03.2013 and as per Section 4 of the said Act, the Sugarcane
Control Board headed by its Chairman is empowered to decide
the sugarcane price. By a notification dated 28.08.2014, the
Karnataka Sugarcane (Regulation of Purchase and Supply)
(Amendment) Act, 2014 was published in terms of which, the
Sugarcane Control Board was to be constituted by the Minister
in-charge of Sugar as Chairman and eleven members amongst
whom the Commissioner of Cane Development and Sugar
Director shall be the Secretary. The petitioners contend that as
a result of the order dated 29.08.2015, the sugar factories
were avoiding the payment of sugar price at Rs.2,500/- per
metric ton (ex-field). The petitioners are therefore, before this
Court challenging the order dated 29.08.2015.
5. The writ petitions are opposed by the respondent
Nos.8, 10 and 12 in W.P.No.201155/2016.
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6. These respondents contend that the petitioners -
associations, are not co-operative societies and therefore, have
no locus standi to maintain the writ petitions. It is further
contended that if they are "societies" registered under the
Karnataka Societies Registration Act, 1961, then unless the
members of the petitioners joined them in filing the writ
petitions, the petitions are not maintainable. They contended
that individual farmers, who had supplied sugarcane to them
have not challenged the order dated 29.08.2015 and therefore,
contended that the petitioners have filed the writ petitions to
gain political mileage.
7. The respondent No.10 has elaborately extracted the
historical facts commencing from the declaration of sugar and
sugarcane as an essential commodities by the Central
Government under Section 3 of the Essential Commodities Act,
1955. Since the same are not relevant for the purpose of these
writ petitions, they are not referred to.
8. (i) In so far as present writ petitions are
concerned, the respondent No.10 has contended that the Act,
2013 is in derogation of the powers exercised by the
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Government of India in fixing the Fair and Remunerative Price
(FRP) under Clause 3(1) of the Sugarcane (Control) Order,
1966 (henceforth referred to as 'Order, 1966'). It is contended
that the Act, 2013 does not empower the Government of
Karnataka to announce any sugarcane price in addition to FRP
fixed by the Government of India at the beginning of the sugar
season. It is contended that under Section 4(f) of the Act,
2013, power is conferred on the Sugarcane Control Board to
decide the sugarcane price on a revenue sharing basis only on
the basis of statistics of the actual revenue realized from sugar,
molasses, bagasse and press mud during the current season.
Therefore, it is contended that the Sugarcane Control Board
can convene a meeting and after considering the information
available with the sugar factories about the revenue realized, it
could announce the sugarcane price on revenue sharing basis.
It is contended that this exercise cannot be undertaken at the
beginning of the crushing operations. It is contended that under
Clause 3 of the Order, 1966, FRP is the minimum price payable
to cane growers by sugar factories. The Act, 2013 facilitates
fixation of additional price, if any, payable at the end of the
season based on revenue sharing, which is based on the
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recommendation of Dr. C. Rangarajan Committee. It is
contended that FRP is based on actual data collected, compiled
and arrived scientifically by the Commission for Agricultural
Costs and Price (CACP) before start of the season, while Act,
2013 provides for fixation of additional price based on actual
realization from sale of sugar, bagasse, molasses and press
mud during the particular season. Heavy reliance is placed on
Dr. C. Rangarajan Committee report to justify the revenue
sharing between the cane growers and the sugar factories. It is
contended that the Sugarcane Control Board cannot declare the
sugarcane price at the beginning of the sugar season itself. It
is also contended that the Government of Karnataka uses
compulsive tactics by fixing higher sugarcane price for its own
Company - Mysugar at Mandya, thereby indirectly making the
price above the FRP as the benchmark for other sugar factories.
It is contended that all farmers within the area reserved for
sugar factories in Karnataka would insist the same price paid by
the Government of Karnataka for its own sugar factory.
(ii) It is contended that during the sugar season 2013-
14, the sugarcane growers led by their leaders in Karnataka
took out an agitation during August - September, 2013 forcing
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the Government of Karnataka to announce the sugarcane price
over and above the FRP. It is contended that the higher
sugarcane price fixed in the past had led to disastrous
consequences on the sugar factories. It is contended that due
to steep fall in the sugar prices, the factories were unable to
pay even the FRP at the end of the crushing season. It is also
contended that the sugar prices are continuously sliding down
from Rs.3,300/- per quintal to Rs.2,600/- - Rs.2,700/- per
quintal.
(iii) It is also contended that the sugar factories in south
Karnataka commence their crushing operations during August
of every year, whereas in the northern part, it commences
during October - November. For the sugar season 2012-13,
the farmers insisted to pay a minimum of Rs.2,400/- per metric
ton and accordingly, the sugar mills in south Karnataka paid
Rs.2,400/-, whereas the sugar factories in north Karnataka had
paid Rs.2,500/- (ex-field) when the sugar prices were hovering
around Rs.3,300/- per metric ton during October, 2012. It is
contended that the factories had to bear the harvesting and
transportation charges of Rs.500/-, which took the price of the
sugarcane to Rs.3,000/- per metric ton. Therefore, it is
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contended that the farmers of north Karnataka are paid
Rs.3,000/- per metric ton (ex-gate). It is contended that by
end of October, 2013, the sugar prices had fallen by Rs.600/-
to Rs.700/- per quintal, thereby, resulting in huge losses during
the sugar season 2012-13. It is contended that the State
Government could not pay Rs.2,400/- per metric ton for the
cane procured for its company - Mysugar and that several
crores of rupees were rooted from the State Exchequer to meet
the financial obligation, but the private factories did not have
the financial support of the Government of Karnataka to meet
the increased price of sugarcane. Thus, it is contended that
any compulsion on the sugar factories to pay over and above
the FRP fixed by the Government of India would result in
disastrous consequences on them.
(iv) It is contended that owing to the agitation of
farmers, the Sugarcane Control Board fixed a meeting on
29.10.2013 to discuss the issue. The Government of Karnataka
in exercise of its power under Section 3(2)(f) and (g) of the
Act, 2013, nominated the members of the Board. It is alleged
that at the meeting of the Board, persons who were not
members but special invitees, had participated in the meeting.
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At the meeting, the nominees of sugar industries had objected
for fixation of sugarcane price during 2013-14 by providing
statistics and requested the Board not to thrust additional
burden. However, the Board announced the sugarcane price of
Rs.2,600/- per metric ton for the ex-gate and Rs.2,500/- per
metric ton for ex-field for south Karnataka and north Karnataka
respectively. It is contended that there are five lakhs workers
and employees working in the sugar factories in Karnataka and
this affected the operations in the sugar factories, thereby
rendering those who are employed directly and indirectly,
jobless. It is contended that the factories were bound to pay
the FRP based on the sugar recovery during the sugar season
2013-14, which is as follows:-
Sl. Recovery FRP (Ex- Actual FRP (Ex-
No. gate) Rs. Harvesting filed) Rs.
% per MT & Per MT
Transporting
cost Rs. /
MT
1 9.5 2100.00 500 1600
2 9.6 2122.1 500 1622.1
3 9.7 2144.2 500 1644.2
4 9.8 2166.3 500 1666.3
5 9.9 2188.4 500 1688.4
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6 10.0 2210.5 500 1710.5
7 10.1 2232.6 500 1732.6
8 10.2 2254.7 500 1754.7
9 10.3 2276.8 500 1776.8
10 10.4 2298.9 500 1798.9
11 10.5 2321.0 500 1821.0
12 10.6 2343.1 500 1843.1
13 10.7 2365.2 500 1865.2
14 10.8 2387.3 500 1887.3
15 10.9 2409.4 500 1909.4
16 11.0 2431.5 500 1931.5
(v) Later, by a letter dated 07.11.2013 addressed by
the nominee of the sugar factories to the Chairman of the
Board, it is requested that the factories be permitted to pay the
FRP during the sugar season 2013-14 and any amount payable
under Section 4(f) of the Act, 2013 can be considered on
receipt of half yearly statistics from the sugar mills. The Board
again convened a meeting on 10.11.2013, where another
representation was submitted to the Chairman explaining the
difficulties faced by the factories along with statistics and
requested that it be permitted to commence crushing
operations by paying the FRP only. The respondent No.10
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contends that based on the revenue sharing basis, the total
realization from one metric ton of sugarcane would be
Rs.2,864/- and treating 70% of it as the sugarcane price (ex-
gate), the price would be Rs.2,005/-. It is contended that the
FRP for 9.5% recovery ex-gate is fixed at Rs.2,100/-, whereas
the Board has fixed Rs.2,500/- per metric ton (ex-gate). It is
also contended that if revenue sharing formula is applied, then
the price of sugar at 11% recovery would be Rs.2,915/-, price
from sale of bagasse would be Rs.113/- and sale of molasses
would be Rs.225/- and press mud would be Rs.8/- taking the
total to Rs.3,261/-. It is claimed that if 70% of Rs.3,261/- is
taken into account, it would be Rs.2,283/-, while the applicable
FRP for 11% recovery ex-gate would be Rs.2,431/-. It is
contended that as against this, the Board has fixed the price
ex-field at Rs.2,500/- which excludes the harvesting and
transportation charges taking the cost of Rs.3,000/- per metric
ton (ex-gate).
(vi) It is contended that an appeal was made to the
Government of Karnataka and Government of India on the
problems faced by the sugar mills and losses suffered due to
the low sugar price in the domestic market and high sugarcane
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price. It is also claimed that the sugar mills in Belgaum and
Bagalkote had issued a paper publication informing the farmers
of Belgaum and Bagalkote that private sector sugar mills would
pay Rs.2,000/- per metric ton (ex-field) and the harvesting and
transportation cost on actual average will also be paid as
advance along with the cane bill for the sugar season 2013-14.
It is also notified that after assessing the actual revenue
realized as per the revenue sharing formula under the Act,
2013, if any additional payments is to be made, the same
would be paid. The respondent No.2 on the instructions of the
respondent No.1 and yielding to the pressure tactics of the
farmers and their leaders, at a meeting held on 10.11.2013
resolved to fix the sugarcane price at Rs.2,500/- per metric ton
(ex-gate) and Rs.2,500/- per metric ton (ex-field). Following
this, a notification was issued on 23.11.2013. It is contended
that in the interest of the farmers, the sugar industries in
Karnataka took a conscious decision to start crushing operation
by paying the FRP fixed by the Government of India. It was
made clear that industries would pay further amount, if any,
payable under the Act, 2013 under the impugned order and
notification or any amount that may be statutorily payable by
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the sugar factories. It is claimed that the Government of
Karnataka had threatened the sugar factories of strict action, if
they refused to pay the sugarcane price as per the impugned
order. The sugar factories, having regard to the falling sugar
prices, requested the Government of Karnataka to pay Rs.500/-
per metric ton as the support price for the farmers directly for
the sugar season 2013-14. The Government of Karnataka
however, announced Rs.150/- per metric ton as ex-gratia to
the farmers on 07.01.2014. It is contended that aggrieved by
the fixation of higher sugarcane price over and above the FRP
for the sugar season 2013-14, some sugar factories and the
association filed W.P.Nos.54865-54867/2013 and connected
petitions, where this Court granted an interim stay during
December, 2013 which was in force till 06.11.2014, when the
writ petitions were dismissed. Appeals were preferred by the
association and others in W.A.Nos.37-39/2015 C/w
W.A.Nos.3140-3142/2014 which too, were dismissed against
which, SLP Nos.32316-32318/2015 were filed. The Hon'ble
Supreme Court by order dated 27.11.2015, directed the
Government of Karnataka not to initiate any coercive action
against the sugar factories and in the event of dismissal of said
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SLPs, the Government of Karnataka was entitled to recover the
amount along with interest at 9% per annum. It is contended
that during the pendency of the writ appeals, the State
Government after realizing that the sugar prices were low and
the sugar factories were not in a position to pay the sugarcane
price fixed by the Board under the Act, 2013, resolved to pay
Rs.100/- per metric ton for the sugar season 2013-14 as per
the Government notification dated 24.01.2015. Subsequently,
when the sugar price further declined, due to excess
production, the factories faced liquidity problem. Therefore, the
State Government again by another notification dated
07.07.2015 paid a sum of Rs.100/- to all the farmers, who had
supplied cane during the sugar season 2013-14. Thus, in all it
is contended that the price paid to the farmers during the sugar
season 2013-14 was a sum of Rs.2,700/- per metric ton (ex-
gate) as against Rs.2,100/- per metric ton for the sugar season
2013-14. This respondent claimed that the farmers were never
deprived of their legitimate dues. Therefore, it is contended
that the Board realized that the farmers were paid much more
than their entitlement and that recovery of sugar was less than
10%, thought it correct to pass the impugned order reducing
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the sugarcane price from Rs.2,500/- per metric ton to
Rs.2,200/- per metric ton (ex-field). It is claimed that the
respondent No.10 had to bear the harvesting and
transportation charges of Rs.550/- per metric ton during the
sugar season 2013-14.
(vii) It is contended that though it was not in arrears of
any dues to the farmers during the sugar season 2013-14, the
State Government during May, 2015 and subsequent
thereafter, called upon the sugar factories to pay the balance of
Rs.100/- per metric ton. When the factories expressed their
inability, the Government seized the sugar stocks and
auctioned by issuing recovery certificates under Clause 3(8) of
the Order, 1966. The respondent No.10 had approached this
Court in W.P.No.42171/2015 challenging the auction of the
sugar stocks. This Court granted an interim order directing the
State Government not to finalize the tenders. In the
meanwhile, an association of farmers filed CCC Nos.1095-
1097/2015 on the ground that the factories had not yet paid
the balance of Rs.100/- per metric ton. However, since there
was an interim order granted by the Hon'ble Supreme Court,
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the contempt proceedings were dropped reserving liberty to
approach the Court after disposal of the SLPs.
(viii) It is contended that the recovery of sugar by the
respondent No.10 was less than 10%. As such, it is not in a
position to pay the sugarcane price fixed at Rs.2,500/- per
metric ton (ex-field) and bear the harvesting and transportation
charges. It is alleged that in respect of respondent Nos.4 to 17
and M/s G.M. Sugars, Haveri as well as M/s Vijayanagara
Sugars Ltd., Mundargi, who were earlier classified as factories
in north Karnataka and later re-classified as factories belonging
to south Karnataka, the sugarcane price were reduced to
Rs.2,500/- per metric ton (ex-gate) and given a benefit of
Rs.300/- per metric ton. The respondent No.10 claimed that it
also sought similar relief before the Board, which agreed that
the recovery of the sugar in the case of the respondent was
less than 10% when compared to sugar factories in Belgaum
where recovery was more than 11%. It is contended that the
sugarcane price fixed by the Central Government was based on
the recovery and not on the location of the factory and
therefore, the fixation of price on the basis of location by the
Board is arbitrary.
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(ix) It is contended that neither the Order, 1966 nor the
Act, 2013 confers power on the Government to fix the
sugarcane price ex-field but is always ex-gate, which is evident
from Clause 3(1) of the Order, 1966. It is contended that based
on the representations made by the respondent No.10 and
others, the issue was placed before the Board and the Board
considered various factors such as,
(a) sugar factories in Hyderabad - Karnataka
region are paying the less sugarcane price
than the factories in north Karnataka;
(b) that Hyderabad - Karnataka area is a dry
area and not fully developed with basic
necessities;
(c) Hyderabad - Karnataka area has been
declared as special zone under Article 371
of the Constitution of India;
(d) there is deficit rain in the last 3 years;
(e) the Government of India has declared the
area as no cane zone area;
(f) the recovery of the sugar in the factories
situated at Indi and Sindagi are similar to
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the recovery of sugar by the factories of
Vijayapura, Kalaburagi and Yadgir.
(x) Therefore, considering the above and the statistics
regarding the average recovery of sugar in four Districts
namely, Vijayapura, Bidar, Kalaburagi and Yadgir, the Board
felt it appropriate to use the yardstick applied to the factories in
south Karnataka by fixing the sugarcane price. Accordingly, it
was resolved by the Board that except Nandi SSK Ltd., 13
sugar factories situate in Bidar, Kalaburagi, Yadgir and
Vijayapura Districts have to pay Rs.2,200/- per metric ton (ex-
field) instead of Rs.2,500/- per metric ton. It is contended that
this was done after reaching the consensus amongst all the
representatives from the Government of Karnataka, sugar
industries and farmers. Therefore, it is contended that it is not
a unilateral act of the Director of Sugar in reducing the
sugarcane price. Hence, it is contended that writ petitions lack
merit and are liable to be dismissed.
9. Similarly, the respondent Nos.8 and 12 filed
separate statement of objections but reiterated the contentions
raised by the respondent No.10 in the statement of objections.
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10. (i) The learned counsel for the petitioners in both
the petitions submitted that the farmers in Hyderabad -
Karnataka area do not have the bargaining power to negotiate
with the sugar factories regarding the price of cane supplied to
them. They contended that the Board taking into account
various circumstances had passed an order dated 10.11.2013
determining the cane price at Rs.2,500/- per metric ton (ex-
field). They submit that while doing so, the Board had taken
into confidence the farmers as well as the sugar factories and a
host of other circumstances such as, the State Reserve Price
(SRP) in Punjab and Haryana. They further contended that the
sugar factories were given enormous benefits such as,
exemption of cane purchase, road tax, entry tax and VAT,
which worked out to Rs.91.24 per ton. They submitted that the
Board therefore, took into account the cost of sugar, molasses,
bagasse and press mud and arrived at a sum of Rs.3,463/- per
metric ton and granted 70% to the farmer amounting to
Rs.2,424/- per metric ton corresponding to a recovery of 9.5%.
After granting the benefit of exemption from payment of tax,
the price was fixed at Rs.2,500/- per metric ton which was
justified.
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(ii) They contended that the sugar factories in
Hyderabad - Karnataka area did not pay the SRP of Rs.2,500/-
per metric ton (ex-field) but challenged the authority of the
Board to fix a price higher than the FRP in W.P.Nos.54865-
54867/2013 and connected petitions. They contended that all
the grounds urged were negatived by the learned Single Judge
of this Court, which were also upheld by the Division Bench.
They contend that in the Special Leave Petitions filed by the
sugar factories, an interim stay was granted directing the State
Government not to take any precipitative action, which was
however subject to the condition that the sugar factories shall
pay interest at the rate of 9% per annum. They contend that
the Special Leave Petitions were thereafter disposed off in
terms of a settlement, in terms of which, the sugar factories
agreed to pay the FRP. They therefore, contend that all issues
raised by the sugar factories were substantially answered by a
Coordinate Bench of this Court.
(iii) However, in order to overcome the SRP at
Rs.2,500/- per metric ton (ex-field), some sugar factories in
Kalaburagi, Bidar, Yadgir and Vijayapura filed W.P.Nos.
201942-944/2015, 2710-2713/2015, 201190/2015,
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201935/2015 and 201076-201078/2015 for a direction to
consider their representations for fixing the cane price ex-gate
instead of ex-field as was done in the case of other sugar
factories in south Karnataka. They contend that this Court
directed the Board to consider those representations in
accordance with law. The Board held proceedings on two dates
namely, 25.06.2015 and 29.07.2015 and held that the average
recovery rate of sugar in Vijayapura, Bidar, Kalaburagi and
Yadgir was 10.50% which was less by 1% than the average
recovery in Belagavi, Bagalkote, north Canara and Nandi Co-
operative Sugar factory of Vijayapura District. It also took into
consideration the harvesting and transportation cost ranged
between Rs.447/- to Rs.1,057/- per ton and arrived at a
conclusion that fixing the price of sugar at Rs.2,500/- per
metric ton ex-gate during the sugar season 2013-14 was not
justified. However, just before the operative portion of the
impugned order, the Board decided to reduce the price of
sugarcane to Rs.2,200/- per metric ton (ex-field) and directed
the Cane Commissioner to issue appropriate order.
Consequent thereto, the impugned order was issued reducing
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the price of sugarcane from Rs.2,500/- per metric ton (ex-field)
to Rs.2,200/- per metric ton (ex-field).
(iv) They therefore, contend that there was no
discussion regarding the cost of bagasse, molasses and press
mud. There was also no discussion regarding the exemption of
tax granted to the sugar factories as well as the State Reserve
Price in various other States, which were linked to recovery at
9.5%. They therefore, contend that the impugned order is
passed only at the behest of the sugar factories after they
failed in their attempt to challenge the authority of the Board to
fix the price of sugarcane.
11. (i) The learned Senior counsel for the respondent
Nos.8, 10, 12, 13, 14 and 16 in W.P.No.201155/2016 and
respondent Nos.7 and 9 in W.P.No.203043/2016 referred to the
comprehensive statement of objections filed by the respondent
No.10 in W.P.No.201155/2016 and contended that the
Government of India had determined the FRP payable by the
sugar mills for the sugar season 2013-14 at Rs.210/- per
quintal linked to a basic recovery rate of 9.5%, subject to a
premium of Rs.2.21 per quintal for every 0.1% increase in
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recovery above that level. He therefore, contended that even
the Government of India was conscious of the fact that the
price of sugarcane was directly proportional to the percentage
of recovery of sugar. He contended that the Board while
reducing the price to Rs.2,200/- per metric ton by the
impugned order dated 29.08.2015 took into account the
percentage of recovery of sugar in the respective districts as
well as the harvesting and transportation charges. He
contended that sugar factories had suffered immense loss as
the price of sugar fell down sharply during the season 2014-15.
He submitted that the Government run sugar factory could
afford to pay the State Reserve Price since the loss sustained
by the Government run sugar factory was absorbed by the
Government. He contended that private sugar factories were
not given any subsidies by the State Government to square off
the losses. Thus, he contends that the sugar factories were
therefore compelled to approach this Court to consider rolling
back the prices ex-field and this Court directed the Board to
look into the grievance of the private sugar factories. He
contends that the Board held its meetings on 25.06.2015 and
29.07.2015, which were attended by representatives of farmers
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and sugar factories where after systematic deliberations, it was
agreed that the SRP could be reduced from Rs.2,500/- per
metric ton (ex-field) to Rs.2,200/- per metric ton (ex-field) for
the sugar season 2013-14. He further contends that as per the
report of Dr. C. Rangarajan Committee, the actual revenue
recovered from sugar, molasses, bagasse, press mud, could be
ascertained after the crushing season and not before. He
contended that assuming that the revenue sharing model
between the farmers and the sugar factories is applied, the
price determined at Rs.2,200/- per metric ton (ex-field) by the
Board is just and proper.
(ii) He further contended that the State Government in
terms of its notification dated 07.01.2014 had paid a sum of
Rs.150/- per metric ton to the farmers as additional incentive
for the sugar season 2013-14. Thus, he contended that the
farmers had by then received Rs.2,100/- per metric ton plus
Rs.150/- per metric ton, which is equivalent to Rs.2,250/- per
metric ton. In addition, the farmers received a further sum of
Rs.100/- per metric ton during the sugar season 2014-15 as
additional incentive. He therefore, contends that the farmers
have realized a higher price of Rs.2,350/- per metric ton. He
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therefore, contends that there was no error in the impugned
order reducing the sugarcane price to Rs.2,200/- per metric ton
(ex-field).
12. The learned Additional Government Advocate
supported the contentions of the learned Senior counsel for
respondent Nos.8, 10, 12, 13, 14 and 16 in
W.P.No.201155/2016 and respondent Nos.7 and 9 in
W.P.No.203043/2016.
13. I have considered the submissions made by the
learned counsel for the petitioners in both the writ petitions as
well as the learned Senior counsel for the respondent Nos.8, 10
12, 13, 14 and 16 in W.P.No.201155/2016 and respondent
Nos.7 and 9 in W.P.No.203043/2016 and the learned Additional
Government Advocate.
14. This Court is called upon to only consider the
legality of the order dated 29.08.2015 issued by the
respondent No.2 reducing the sugarcane price from Rs.2,500/-
per metric ton (ex-field) to Rs.2,200/- per metric ton (ex-field)
for the sugar season 2013-14.
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15. The Government of India had in terms of its order
dated 20.02.2013 fixed the FRP of sugarcane payable by sugar
mills for the year 2013-14 at Rs.210/- per quintal linked to a
basic recovery of 9.5% and subject to a premium of Rs.2.21/-
per quintal for every 0.1% increase in recovery above that
level. The respondent No.2 had in terms of its notification
dated 23.11.2013 fixed a sum of Rs.2,500/- per metric ton (ex-
field) in respect of sugar factories lying within north Karnataka
for the sugar season 2013-14. While doing so, the respondent
No.2 took cognizance of the concessions given to the sugar
factories in the matter of waiver of cane purchase tax, road
tax, entry tax and VAT on sugarcane amounting to Rs.91.24
per ton. It also took into account the cost of byproducts such as
bagasse, molasses and press mud during the sugar season
2013-14. It therefore, determined the price of sugar at
Rs.2,729/- per metric ton based on recovery of 11% and after
factoring the benefit of tax concessions, the cost of sugar per
ton was Rs.2,825/-. Therefore, after deducting the harvesting
and transportation charges, the price of sugarcane was
determined at Rs.2,500/- per metric ton (ex-field). This
decision was taken by the Board at a meeting held on
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10.11.2013 and was attended by the concerned Minister of
Small Scale, Endowment and Sugar, Minister for Agriculture,
Minister for Corporation, representatives of farmers,
representatives of sugar factories and members of the Board.
Based on the price determined by the respondent No.2, the
farmers in north Karnataka namely, Kalaburagi, Bidar,
Vijayapura and Yadgir have supplied sugarcane to the factories.
Though the sugar factories had purportedly paid the FRP but
they failed to pay the SRP within fourteen days from the date of
supply of sugarcane as stipulated under Section 9 of the Act,
2013. The sugar factories instead, challenged the
enhancement of the sugar price by the respondent No.2 in
various writ petitions filed before this Court (W.P.Nos.54865-
54867/2013 and connected petitions). The questions that fell
for consideration before the Coordinate Bench of this Court
were as follows:-
i) Whether the Act, 2013 is liable to be
struck down as unconstitutional?
ii) Whether the impugned price fixation is
arbitrary?
iii) Whether the presence of non-members
of Sugarcane Control Board in its
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meeting had vitiated the decision
making process?
16. (i) The Coordinate Bench after holding that
raising sugarcane is an agricultural activity and being an
agricultural produce, its regulation was a State subject under
Entry No.14 of the List - II and hence, the State Government
had the legislative competence. It also referred to Explanation
- II to Section 3(3-C) of the Essential Commodities Act, 1955
with effect from 01.10.2009 and held that the State
Government has the power to fix the price higher than the FRP
fixed by the Central Government. It also noticed that the
Central Government had conveyed its pleasure to the State
Government in it enacting the Act, 2013, which was evident
from a letter dated 16.07.2013. The Bench held that this
suggested that the cane price fixed by the State Government
was realistic. It held that the field for fixing the price higher
than the minimum price fixed by the Central Government is left
open in the Order, 1966, as the FRP fixed by the Union of India
is the floor price for the entire country and an option was
reserved to the State Government to fix higher price. It
noticed that the Allahabad High Court in the case of Rashtriya
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Kisan Mazdoor Sangathan (Regd.) through convenor vs.
State of U.P. and others (W.P.No.29523/2014),
determined the price at a sum of Rs.280/- per quintal under the
Sugarcane (Regulation of Supply and Purchase) Act, 1953.
Therefore, it held that the State Government is competent to
enact the Act, 2013 and also fix a higher price than the FRP.
(ii) It further noticed that the sugar factories in north
Karnataka were paying the sugarcane price on ex-field basis in
the past also and that the system of fixing prices zone - wise
within a State was not violative of Article 14 of the Constitution
of India.
(iii) It refused to accept the claim of the sugar factories
that they were incurring losses and held that losses could be
due to condition of plant and machinery, quality of
management, investment policy, labour relations etc., on which
no data was furnished.
(iv) It also noticed that in Tamilnadu, the sugar
recovery was less than 9%, however, the State-agreed price
was Rs.2,650/- per ton, while in northern part of the
Karnataka, the sugar recovery increased from 10.36% during
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2012-13 to 10.97% during 2013-14. It also noticed that out of
60 sugar mills in Karnataka, only 8 mills were aggrieved over
the fixation of price at Rs.2,500/- per metric ton (ex-field). It
therefore, held that the sugar factories were unable to establish
that the prices were either excessive or unreasonable, but on
the contrary, held that it may be possible for the farmers to
contend that the price fixed was on a lower side.
(v) The contention of the petitioners therein that the
price fixation should be at the end of the season, was rejected
and it was held that such contention was contrary to Section 9
of the Act, 2013, which required a sugar factory to pay the
price within fourteen days from the date of price fixation.
Therefore, it held that the price of Rs.2,500/- per metric ton
(ex-field) was neither arbitrary nor excessive.
(vi) In so far as the non-members participating in the
meeting of the Sugarcane Control Board, it held that such
participation did not prejudicially affect the interest of the sugar
factories. Besides, it held that the presence of non-members
had led to the passing of the impugned resolution fixing the
sugarcane price at Rs.2,500/- per metric ton (ex-field).
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17. After the farmers had supplied the cane at the SRP
of Rs.2,500/- per metric ton (ex-field), which resulted in a
concluded contract between the farmers and the sugar
factories, the latter were bound to pay the SRP of Rs.2,500/-
per metric ton (ex-field) within fourteen days as prescribed
under Section 9 of the Act, 2013. Even after the Coordinate
Bench of this Court decided W.P.Nos.54865-54867/2013 and
connected petitions against the sugar factories, which was
upheld by the Division Bench, the sugar factories did not pay
up the SRP to the farmers for the sugar season 2013-14.
However, they again knocked at the doors of the Board by
submitting representations to roll back the price of sugarcane in
view of the less recovery rate and the high harvesting and
transportation expenses. They approached this Court for a
direction to the Board to consider their representations in
various writ petitions, which were all disposed off directing the
Board to consider the representations.
18. The Cane Commissioner/respondent No.2 while
considering the requests of the Mahatma Gandhi Sugar Factory
Ltd., Bhalki, M/s Jamkhandi Sugar's Ltd., Unit - II, M/s. Manali
Sugars Ltd., M/s Indian Sugar Manufacturing ltd., M/s Dhyana
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Yogi Sri. Shivakumar Swamiji Sugar Ltd., Hirebevanur,
pursuant to order dated 10.02.2015 passed in W.P.Nos.2710-
2713/2015 and M/s N.S.L. Sugars Ltd., Bhusnur pursuant to
the order dated 05.02.2015 in W.P.No.201190/2015, Sri.
Renuka Sugars Ltd., Havalaga pursuant to the order dated
25.03.2015 in W.P.No.201935/2015 and Core Green Sugars
and Fuels Ltd., Tumkur, Shahapur Taluk and Ugar Sugar Works
Ltd., Jewargi pursuant to the order dated 30.01.2015 passed in
W.P.Nos.201076-201078/2015, passed the impugned order
reducing the price of sugarcane from Rs.2,500/- per metric ton
(ex-field) to Rs.2,200/- per metric ton (ex-field) in respect of
sugar factories lying within Bidar, Kalaburagi, Yadgir and
Vijayapura. Therefore, the question that arises for
consideration is,
"Whether the Sugarcane Control Board
after fixing the price under Section 4A of the Act,
2013 could review its order after the order of the
Coordinate Bench of this Court in
W.P.Nos.54865-54867/2013 and connected
petitions and after the sugarcane farmers had
supplied the cane to the factories?"
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19. The ancillary question that arises for consideration
is,
"Whether the Cane Commissioner/respondent
No.2 could alone decide to reduce the price of sugar
in the year 2015 in the respect of the supplies
made during the year 2013-14?"
20. It is relevant to note that the order of the
Coordinate Bench of this Court in W.P.Nos.54865-54867/2013
and connected petitions was upheld by the Division Bench of
this Court in W.A.Nos.3140-3142/2014, which was then
challenged in SLP Nos.32316-32318/2015. The Hon'ble
Supreme Court in terms of its interim order 27.11.2015, had
directed the State not to take any coercive steps against the
petitioning sugar factories and held that if the Special Leave
Petitions fail, the State would be entitled to recover the dues
along with interest at the rate of 9% per annum. The Special
Leave Petitions were disposed off on 12.02.2018 in view of the
settlement arrived at between the sugar factories and the
farmers that the State Advisory Price as fixed under the Act,
2013 would be paid on or before 30th June, 2016. Therefore,
the contentions urged by the sugar factories that the State has
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no legislative competence to enact the Act, 2013, is without
any basis. This question is now fully covered by the
constitution Bench judgment of the Hon'ble Supreme Court in
the case of West Uttar Pradesh Sugar Mills Association
and others vs. State of Uttar Pradesh and others [(2020)
9 SCC 548].
21. The impugned order is passed on the
representations made by 12 sugar factories in Bidar,
Kalaburagi, Yadgir and Vijayapura excluding Nandi Co-operative
Sugar Factory to reconsider the sugarcane prices at ex-gate for
the sugar season 2013-14. These representations were based
on the following:-
(a) sugar factories in Hyderabad - Karnataka
region are paying less sugarcane price than the
factories in north Karnataka;
(b) that Hyderabad - Karnataka area is a dry area
and not fully developed with basic necessities;
(c) Hyderabad - Karnataka area has been declared
as special zone under Article 371 of the
Constitution of India;
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(d) there is deficit rain in the last 3 years;
(e) the Government of India has declared the area
as no cane zone area;
(f) the recovery of the sugar in the factories
situated at Indi and Sindagi are similar to the
recovery of sugar by the factories of
Vijayapura, Kalaburagi and Yadgir.
(g) that these factories were procuring sugarcane
from distant places resulting in excess
harvesting and transportation charges.
(h) that Bidar District is the most backward District
in the State and the yield is around 9.5% to
10%.
22. The Board met on 25.06.2015 and 29.07.2015 and
purportedly considered the representations as well as the
orders of this Court in the writ petitions filed by the sugar
factories. It was claimed that the District - wise statistics of
yield during the sugar seasons 2012-13 and 2013-14 and the
harvesting and transportation charges were considered. It
considered the prices fixed for the sugar season 2013-14 in
Belagavi, Bagalkote, north Canara District and Nandi Co-
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operative Sugar Factory at Vijayapura disclosed the yield
between 10.68% to 11.01%. While in respect of Vijayapura,
Bidar, Kalaburagi and Yadgir, the yield range from 9.69% to
10.89%. Likewise, in respect of Gadag, Haveri, Shivamogga,
Davanagere, Bellary, Mandya, Mysuru and Hassan, the price
was fixed for ex-gate during the sugar season 2012-13 and
2013-14, the yield range from 8.23% to 10.27% during the
sugar season 2012-13 and 9.15% to 10.36% during the sugar
season 2013-14. It was found that in respect of Bidar,
Kalaburagi, Yadgir and Vijayapura excluding the Nandi Co-
operative Sugar Factory, the average District - wise yield
ranged from 9.91% during 2012-13 and 10.50% during 2013-
14. Therefore, it held that the yield in these four Districts was
less by 1% compared to the average yield in Belagavi,
Bagalkote, north Canara and Vijayapura Districts and command
area of Nandi Co-operative Sugar Factory. It was also found
that the harvesting and transportation charges in Bidar,
Kalaburagi, Yadgir and Vijayapura ranged between Rs.447/- to
Rs.1,057/- per metric ton. The Board held that the request of
the sugar factories to deposit the price of the sugarcane for the
sugar season 2013-14 ex-gate was not just. In so far as the
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lesser yield, the Board considered whether a sum of Rs.300/- to
be reduced from the SRP of Rs.2,500/- per metric ton. It is
claimed that some representatives of farmers from Kalaburagi
mentioned that sugar factories in Bidar District had always less
yield and therefore, in respect of sugar factories in that area
where yield was less than 10%, the request for considering the
sugar price were considered. However, representatives of
farmers from Bengaluru zone and Belagavi zone insisted that
farmers should be paid the SRP of Rs.2,500/- per metric ton.
All the members present allegedly contended that in respect of
factories in Hyderabad - Karnataka area and Indi and Sindagi
Taluks of Vijayapura, where there was a lesser yield, all of
them should be treated alike. The Board without any
discussion, by majority reduced the price of Rs.2,500/- per
metric ton (ex-field) to a sum of Rs.2,200/- per metric ton (ex-
field) and directed the respondent No.2 to issue appropriate
orders.
23. Based on the above, the respondent No.2 issued
the impugned order reducing the sugarcane price from
Rs.2,500/- per metric ton (ex-field) to Rs.2,200/- per metric
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ton (ex-field) in respect of 13 sugar factories in Bidar,
Kalaburagi, Yadgir and Vijayapura.
24. The Board consists of 12 members which includes
the Minister in-charge of Sugar, Minister in-charge of
Agriculture and Minister in-charge of Co-operation, Agricultural
Commissioner, farmers' representative not exceeding five,
occupiers of sugar factories not exceeding five, an Agricultural
Economist from UAS, Dharwad and the Commissioner for Cane
Development. The functions of the Board as contained in
Section 4 of Act, 2013 include the declaration of additional
sugarcane price over and above the FRP for the year on
revenue sharing basis. The factors to be taken into
consideration by the Board for deciding additional sugarcane
price is contained in Section 4D, which is extracted below:-
"4D. Factors to be taken into consideration
by the Board for deciding additional Sugarcane
Price.- The Board while deciding the additional
Sugarcane price shall take following factors into
consideration, namely;-
(1) The recorded weight of the sugarcane
delivered, actual revenue realized from sugarcane
crushed and production of sugar and its by-products
namely bagasse, molasses, press-mud; and sugarcane
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juice directly utilized for production of any other
produce;
Explanation.- For the purpose of this clause,
revenue realized from sugarcane crushed during the
year shall include actual production of sugar and its by-
products viz., bagasse, molasses, press-mud and
sugarcane juice directly utilized for production of any
other produce, if any, which are suitably valued
considering the sales, opening and the closing stock
though they may not have been sold.
(2) The report of the expert committee
constituted under section 4C on the revenue realization
for determination of additional sugarcane price.
(3) Such other factors as may be prescribed."
25. Section 9 of the Act, 2013 mandates as follows:-
"9. Payment to sugarcane growers.- (1) The
payment to the sugarcane growers shall be in two stages.
In the first stage immediately, on supply of sugarcane, the
sugarcane grower shall be paid the Fair and Remunerative
Price based on the previous year's recovery of the
concerned factory by the occupier of the factory. All other
conditions for sugarcane payment shall be as per the
provisions of clause 3 of Sugarcane (Control) Order, 1966.
(1A) In the second stage, the occupier of the factory
shall make the payment of additional sugarcane price within
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fourteen days from the date of declaration under section
4A.
(1B) Every payment made by the occupier of the
factory under this Act shall be paid to sugarcane growers
through his bank account only.
(1C) The provisions of the Sugarcane (Control)
Order, 1966 to recover the dues with respect to Fair and
remunerative price shall mutatis-mutandis be applicable for
recovery of arrears of additional sugarcane price also.
(2) Payment shall be made on the basis of the
recorded weight of the sugarcane at the factory. The price
of the sugarcane to be payable be calculated to the nearest
rupee.
(3) An occupier of a factory shall be liable to make
for all payments due for sugarcane purchased by him and if
such occupier of the factory fails to make payments, the
occupier of such factory shall be responsible for making
such payments with interest as specified in Sugarcane
(Control) Order, 1966 thereon from the date such payment
falls due."
26. A perusal of the impugned order dated 29.08.2015
does not show as to who all participated in the deliberations
that was held on 25.06.2015 and 29.07.2015. No records are
produced before the Court to justify that the representations of
the sugar factories were considered at a meeting of all the
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members of the Board. There is also no provision in the Act,
2013 which authorized the Board to reduce the price of
sugarcane already fixed under Section 4(f) and Section 4A of
the Act, 2013. There is also no power vested in the Board to
review its earlier order dated 23.11.2013 by which, the price of
sugarcane was fixed at Rs.2,500/- per metric ton (ex-field).
27. Nonetheless, the Board purportedly held
proceedings on 25.06.2015 and 29.07.2015 and reduced the
price of sugarcane to Rs.2,200/- per metric ton (ex-field) for
the sugar season 2013-14. Therefore, on the first principles of
law, the Board committed an error in entertaining the
representations of the sugar factories and reducing the price
that was already fixed as per the notification dated 23.11.2013.
28. Even assuming that the Board has the power to
reduce the price of sugarcane, it is relevant to note that the
Government of India had determined the FRP payable by the
sugar mills for the sugar season 2013-14 at Rs.210/- per
quintal linked to a basic recovery rate of 9.5%, subject to a
premium of Rs.2.21/- per quintal for every 0.1% increase in
recovery above that level. The impugned order itself shows
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that the recovery of sugar during the year 2013-14 in
Vijayapura, Bidar, Kalaburagi and Yadgir ranged from 9.95% to
10.85%. Assuming the statistics contained in the impugned
order to be true, then the FRP should have been as follows:-
District Sugar Yield FRP per FRP per
season recovery ton ton
based on
recovery
Vijayapura 2013-14 10.47 2,100 2,321
Bidar 2013-14 9.95 2,100 2,199.45
Kalaburagi 2013-14 10.85 2,100 2,398.35
Yadgiri 2013-14 10.50 2,100 2,321
29. If the realization from bagasse, molasses and press
mud is taken into consideration, the price fixed by the Board at
Rs.2,500/- per metric ton (ex-field) is neither excessive nor
irrational. It is not known as to how the Board meekly yielded
to the request of the sugar factories without considering,
(a) that it had no power to undo the sugar price
already fixed that too, after the farmers had
supplied the cane and waiting for the sugar
factories to pay the price.
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(b) that there is no provision under the Act, 2013
to review its earlier orders fixing the price of
sugarcane.
(c) that this Court specifically held in
W.P.Nos.54865-54867/2013 and connected
petitions that the State Government of Uttar
Pradesh had fixed the State Reserve Price at
Rs.280/- per ton and Tamilnadu at Rs.2,650/-
per metric ton and the States of Punjab and
Haryana and Uttarkhand had fixed the sugar
price higher than the price fixed in Karnataka.
(d) that this Court specifically held that sugar
factories were not in a position to show the
impugned price is either excessive or
unreasonable, while it may be possible for the
sugarcane growing farmers to contend that
the impugned price fixed was on the lower
side.
30. In view of the above, the first question framed is
answered against the sugar factories and it is held that the
Board did not have the power to review its earlier order dated
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23.11.2013 fixing the sugarcane price at Rs.2,500/- per metric
ton (ex-field). As far as the relief that has to be granted to the
farmers, admittedly the Hon'ble Supreme Court had granted an
interim order directing the State Government not to take any
precipitative action against the sugar factories to pay the SRP,
which was subject to the condition that the sugar factories shall
pay interest at 9% per annum. Having regard to the mandate
contained in Section 9 of the Act, 2013, the sugar factories are
liable to pay interest at 9% per annum on the balance of the
SRP at Rs.2,500/- per metric ton (ex-field) within three months
from the date of receipt of a certified copy of this Order. Failing
this, the respondent Nos.1 and 2 are directed to take action to
recover dues as provided under the Sugarcane Control Order,
1966.
31. As far as the ancillary question is concerned, the
respondent No.2 had issued the impugned order on the
directions of the Board and hence, it is held that the impugned
order was not issued by the respondent No.2 but was issued on
the directions of the Board.
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32. As far as the contention that the petitioners are not
co-operative societies and hence, do not possess the locus
standi to question the impugned order, it is relevant to note
that such a contention was not raised in W.P.Nos.54865-
54867/2013 and connected petitions. On the contrary, the
sugar factories filed the writ petitions against the very same
bodies of farmers. Besides this, the representatives from these
bodies participated in the proceedings of the Board and
therefore, they are entitled to represent the interest of the
farmers. In W.P.No.201155/2016, a few farmers have also
joined in presenting the writ petition and this liquidates the
contention of the sugar factories that the petitioners have no
locus standi.
33. In view of the above, these petitions deserve to be
entertained. Hence, the following
ORDER
i) These petitions are allowed.
ii) The impugned order dated 29.08.2015 passed
by the respondent No.2 in File
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No.DSK/STT/12/2015-16 based on the
meetings of the Sugarcane Control Board is
quashed.
iii) Consequently, the price of sugarcane supplied
by the farmers in Bidar, Yadgir, Kalaburagi
and Vijayapura is restored at Rs.2,500/- per
metric ton (ex-field).
iv) In view of the interim order passed by the
Hon'ble Supreme Court in SLP Nos.32316-
32318/2015 directing the State Government
to recover the deficit sugarcane price along
with interest at the rate of 9% per annum, the
sugar factories in Kalaburagi, Yadgir, Bidar
and Vijayapura excluding Nandi Co-operative
Sugar Factory shall pay a sum of Rs.400/- per
metric ton (ex-field) along with interest at the
rate of 9% per annum to the respective
farmers during the sugar season 2013-14
within a period of three months from the date
of receipt of a certified copy of this Order.
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v) If the sugar factories failed to do so, the
respondent Nos.1 and 2 herein are directed to
recover the balance as stated above as
provided under the Sugarcane Control Order,
1966 and credit it to the account of the
respective farmers.
Sd/-
(R.NATARAJ)
JUDGE
PMR
